Greetings all – it has been a challenging few weeks for all, so I felt it important that I give you some insight into where we’ve come and where we are heading in the midst of this transitional period.
First, I will commit to you to step up the comm here through the coming weeks and months so that you have the best information that I can provide with respect to our program activity. We’ve had several ‘all hands’ sessions at the various levels of the program in the wake of the FY11 budget proposal, but in the interim I think the leadership owes you some insight into our approach to honoring our commitments. So consider this a first installment in discussing our plan forward – which begins with understanding our present state.
We’ve spent several ‘all hands’ discussions already on the ‘environment’ we find ourselves in, and the HSF team is keenly tuned in and attentive to this, such that I likely don’t need to say much more. As one member of our leadership team put it to me recently…
“We are attempting to walk this fine line between adjusting work in FY10 to meet the fiscal constraints of a very tight year and NOT have that be perceived as a step towards implementation of the proposed cancellation, which gets us in trouble with Congress. At the same time we are attempting to start new work that was always in the plan, and not have that perceived as deliberately working against our bosses at HQ and in the White House. This causes confusion and unrest among the line orgs who don’t understand why we are making the decisions that we are sometimes forced to make.”
Most of what I will share with you here and in the days and weeks ahead will be only marginally related to ‘cancellation’. The agency is trying to be smart about how we conduct ourselves in this transitional period between fielding of the FY11 budget proposal to ‘cancel Constellation’ and the ratification of that proposal by Congress through the legislative process. We find ourselves somewhat ‘caught in the middle’ to walk a line that does our best to meet our responsibilities to both sets of direction.
Most of my emphasis will be instead on our path forward to manage our portfolio most effectively in a way that brings greatest value to any new path our national leadership may choose. Whether some portions of our content and contracts transition to that ‘new path’ or not, the things we are learning and the products we are producing are still central to any human spaceflight program that lay ahead of us.
In this note, I will devote the bulk of my words to update you on our present program state. First, as we reach the halfway mark of 2010, we continue to meet our major milestones effectively. We’ve flown one test flight and are enjoying a bounty of data from it, and are preparing for another. We have conducted a successful technical review of our integrated system, finding no significant technical gaps in our product and well understood plans to address our technical issues. Orion’s Software PDR kicked off a couple of weeks ago, the Ares Software PDR kicked off last week, and Ground Ops is on track to kick off their PDR in the weeks ahead. Orion’s Pad Abort 1 flight test is looking solid for early May, and Ares will fire Development Motor number 2 of the Ares I First Stage in September.
But we face significant challenges as well. Mostly these are related to erosion we are seeing in our schedules from loss of funding and buying power in this most-lean year. The graphic below illustrates this, which I pulled from 2008’s Cx Accel Study…
The illustration is self explanatory – we knew we would be challenged to deal with this FY09 and FY10 constrained funding situation, and we did our best to plan and prioritize appropriately so as to assure reasonable success for March of 2015 first crewed flight.
The events of the last 18 months, however, have exacerbated the challenge we face. A confluence of circumstances promulgated over that period has put the March 2015 readiness date in jeopardy if our program plans, content, and overall approach were to remain unchanged.
The contributing circumstances are generally three-fold…
1) the effects of being under continuing resolution for roughly 10 of the last 16 months, in a phase of the program (as one can see from the graphic) when spending is still ramping up to its peak funding, combined with the slower than planned disbursement of appropriated ARRA funds (some of which are as yet to be deployed).
2) the shorting (vs our cost plan) of planned FY10 funding by roughly $160M by the time the appropriated funds were allocated to CxP, this due to rescissions and other non-CxP budget obligations within ESMD.
3) the inability to realize a planned $200M cost share feature in the Orion contract with Lockheed, a feature we had planned to realize in our cost plan, when it was disapproved in January due to legal concerns.
All this plus the normal cost threats we deal with in any execution year which represented as of January a 5-7% challenge.
A reminder also that FY10 has always been our ‘thinnest’ year, as one can see from the graphic – a typical project/program would ramp smoothly to its peak, and we’ve always had this funding ‘divit’ to negotiate – which is real work that could not be done in the normal progression of the program. In our case it results in the deferral of long lead hardware and engineering development units, and such deferrals increase cost and schedule risk of ‘surprises’ with the design later.
Our best estimate at the moment is that we are a year down on our baseline plan, unless we do something to lean out and streamline what we are doing. The big dollars and months of schedule to recover are in the ground test and verification program, and we are actively studying our options to restructure our plan and approach to pull dates back in, and in fact fly test flights as early as late 2012.
My intention is to enact the appropriate measures to adjust our program trajectory and organization to recover the confidence in the schedule due to the factors mentioned above, in the unlikely event that the program were to continue. The program leadership focused on this topic during our retreat a couple weeks ago, and we will need your help as we prioritize our remaining FY10 plans consistent with those emerging strategies. I am quite encouraged by the way the management team is approaching this challenge, and I will update all of you in a subsequent note on our plans and approach.
Regarding impacts to our progress related to proposed cancellation, to date this has had at most a secondary effect, the dominant issues being our FY10 challenge. The program continues to execute its FY10 plan within the funds appropriated, deferring some targeted new start work in consultation with NASA HQ addressed on a case by case basis. A small number of contract actions have been placed on hold during the post-budget rollout reconciliation activity, and any such actions will be eventually brought forward to the agency for disposition as needed.
Hopefully this helps. It is important to communicate that many of the actions we will be taking through the Spring will be the result of FY10 cost management and NOT because of the specter of cancellation. Meanwhile, we will have and will continue to consult closely with NASA HQ on appropriate planning for program closeout, should that proposal be enacted in future appropriations.
Stay tuned, more to come… jh